Daily FSR Update - 7 August 2026

UK

FCA applying increased scrutiny to Annex 1 firms

In a statement, the FCA explains that it is concerned about a number of risks it has identified among unregulated lenders, safe custody providers, money brokers and financial leasing companies (Annex 1 firms), in particular the potential for them to facilitate financial crime.

Among other issues, the FCA said that it has seen firms rely too heavily on the financial crime controls of their parent company, when each individual firm within a group must assess whether controls are appropriate for their financial crime risks, governance and operations. It is also concerned about the risks that unregulated lending, often conducted through complex structures, poses to consumers and markets.

To address these risks, the FCA is closely scrutinising applications to register as an Annex 1 firm. It has also sent an information request to around 900 Annex 1 firms to improve its understanding of their activities, business models and risks. This follows on from the work the FCA did with 300 Annex 1 firms in late 2025 and means it will have contacted all registered Annex 1 firms.

FCA adds key dates to its Regulatory Sandbox: climate scenarios cohort page

The FCA has added key dates to its Regulatory Sandbox: climate scenarios cohort page. Applications open 1 October 2026 and close 30 November 2026. The FCA expects firms accepted into the cohort to begin testing in Q1 2027.

The average testing period will be six months. The length of each test will depend on several factors, including the firm’s readiness, whether it is testing with live customers, the use case, business model and the firm’s capability.

The FCA will publish details on how to apply when applications open on 1 October 2026. After applications close, it will assess submissions and expect to notify firms of the outcome in early 2027. Successful firms will receive further information on next steps. There is no formal appeals process, but the FCA will provide feedback if an application is unsuccessful.

FCA adds information about inside information declaration to prospectus/circular page

The FCA has added information in relation to inside information declarations to its Submit a prospectus or circular page. For equity cases, the issuer must submit a declaration form with its first submission, stating whether its submission contains inside information. If it does, the issuer must explain what that information is. The FCA needs this information so it can apply the appropriate internal controls when reviewing the issuer’s submission. From 21 September 2026, all first submissions of equity documents, including guidance requests, must include this form. The FCA will not allocate the issuer’s case for review until it receives a completed form.

Commons Library: Research briefing in relation to cryptoassets

The House of Commons Library has published a research briefing on what cryptoassets are, how they work, their history, benefits and risks, and UK regulation.

EU

EBA releases latest ESG risk dashboard

The European Banking Authority (EBA) has published its latest ESG risk dashboard, showing continued stability in banks’ transition and physical climate risk indicators across the EU/EEA in H2  2025. The results also indicate gradual improvements in the availability and quality of climate-related data, particularly for energy efficiency assessments of mortgage portfolios, supporting more robust climate risk monitoring in the banking sector.

ECB President Lagarde responds to MEP on digital euro

The European Central Bank (ECB) has published a letter from President Christine Lagarde to a Member of European Parliament (MEP) about the digital euro. The President stated, among other things, that:

• the ECB is committed to a digital euro will be a digital version of cash which will complement physical cash, not replace it;
• in line with the Eurosystem’s cash strategy, the ECB is working to ensure that physical cash remains available and accepted across the euro area as both a means of payment and a store of value;
• the digital euro has been designed to minimise data processing while ensuring the segregation of information; and
• the offline functionality of the digital euro will offer cash-like privacy, while for online payments only users’ payment service providers (PSPs) will be able to link payments to users’ identities.